Residents from UK, US, Canada and EU are banned from betting on Polymarket’s offshore platform. Photograph: Samuel Boivin/NurPhoto/Shutterstock View image in fullscreen Residents from UK, US, Canada and EU are banned from betting on Polymarket’s offshore platform. Photograph: Samuel Boivin/NurPhoto/Shutterstock Banking UK urged to act as Polymarket takes bets on whether HSBC and Lloyds will fail Revelation comes amid mounting concern over online prediction market’s effects on integrity of financial system
Prefer the Guardian on Google UK authorities are being urged to intervene after it emerged that the online prediction market Polymarket has been taking thousands of dollars worth of bets over whether HSBC and Lloyds will fail.
Polymarket – the US-owned company which holds bets on anything from football matches, to the existence of aliens, to when a bomb drops on a city – has allowed users to take $77,507 (£58,530) worth of positions on whether the world’s biggest banks will go under by the end of this year.
That includes lenders ranging from JP Morgan to BNP Paribas, as well as two of the largest on UK high streets: HSBC and Lloyds Banking Group .
Read more While residents from UK, US, Canada and EU are banned from betting on Polymarket’s offshore platform, it leaves punters from across roughly 150 countries in a position to monetarily benefit from events that would create huge financial instability and threaten the health of entire economies.
In a sign that authorities are taking the issue seriously, the UK’s Financial Conduct Authority (FCA) told the Guardian it had been speaking to international regulators about prediction markets, as part of efforts to protect “market integrity”.
There are growing concerns over insider trading and market manipulation on Polymarket by bad actors hoping to win big on online bets.
That raises the stakes for the banking industry, which has already been told to prepare for the risk of social media-fuelled bank runs , where customers withdraw cash at speed. Silicon Valley Bank and Credit Suisse collapsed in 2023 after big stock sell-offs and bank runs, both of which were accelerated by a frenzy of speculation on platforms such as X and WhatsApp.
The Treasury committee member and Liberal Democrat MP Bobby Dean said UK authorities should intervene. “Polymarket has a poor reputation for stopping insider trading or bad actors placing bets on their platform, so it’s easy to see how it could be exploited to try to aggravate real shifts in market sentiment,” he said.
“If the bank-related activity grows on the platform and then a particular market was to escalate rapidly, it could even trigger bank runs,” Dean added.
“I would urge our regulators to get in contact with their counterparts in the US to raise concerns. We should not turn a blind eye to the risks because they are relatively small today, we’ve all seen how quickly things can move in this sector.”
Polymarket bosses said they did not see a problem with the bets themselves, arguing they were democratising markets that were previously restricted to elite traders and institutions.
The company’s chief legal officer, Neal Kumar, said: “The information in these markets is already public. Banks, hedge funds and credit professionals have had access to credit default swap markets for years. You shouldn’t need to work at an institution like that to have access to information on a topic of this importance like bank failures.
“Polymarket simplifies the…